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At 05:24 AM 12/20/97 GMT, jim roush wrote:
>John,
>
>Now that the markets have closed, what do you think. If this is a
>'symmetrical bottom', where would you measure up Rom to calculate the
>next top. I.E., would you start the next up leg from today's low or
>the close. Either one would take us to a new high on the SPX,
>although not by a lot.
>
>
>jar@xxxxxxxx
>James A Roush
James and Realtraders,
Sorry for the delay in responding...holiday shopping.
James, you ask some good questions but difficult ones at that. Let me
see if I can answer them.
Let me start by saying that Fridays (12/19/97) LOWS EXCEEDED the maximum
leeway allowable, by several points. Specifically, our maximum target
allowed for a decline was down to the 927.50 level on the S&P 500 Cash
Index. In actuality, we declined down to 925.02. Thus, technically
speaking, we had a FAILURE of this symmetrical wave structure. As such,
one of two things has just occurred: 1. After a small bounce, we will
continue to decline to the downside or 2. We have just created a NEW wave
structure which would definitely propel us to new highs based on this 61.12
point decline. (If this is the case, the size of this wave structure could
take us to a level of 1060 - 1100 on the S&P 500 before it is all over -
current level is 950). Personally, I DO NOT believe this second scenario
will come to fruition at this time!
With that said, how do I expect to play this market....VERY CAUTIOUSLY!!!
One of the nice things that happened during Friday's decline on our
short-term charts (60 Minutes) was that we formed a Japanese 'Hammer'
formation, which usually suggest a bottom has been formed. When I combine
this with the oversold indicators and oscillators that I follow and the
fact that we were very close to our symmetrical matching bottom, I was not
surprised that we have now reversed to the upside even thought it was
pretty crazy on Friday. But the main question that we must ask is: HOW
STRONG IS THIS BOTTOM.
Personally, I still have to believe that the overall market is STILL IN A
DOWNWARD BIAS, as stated several months ago but there is a possible trading
opportunity at this time. As such, I have committed some new funds to the
market especially in some of the oversold sectors such as electronics and
oil services but these positions could be pulled very quickly, especially
if we break below Friday's lows. Also, I have exchanged some positions and
purchased some of the food stocks and some of the insurers.
Finally, you may ask why would I go long at all if my overall market bias
is to the downside. The answer, several reasons: 1. I am trying to take
advantage of the seasonal strength that so often presents itself this time
of year. 2. Unbelivable bond market strength which may help support
Friday's bottom. 3. Many of the stocks that I bought have been crushed,
some down 30, 50 or even 70% in the last few months and 4th. Since the
symmetrical structure that I presented last week was sooooo close to
holding, maybe it will provide a really good rally in the market and I want
to be a participant.
Hope this was what you were looking for.
Sincerely,
John Boggio
PS In your question above, you ask the question: do I use the low or the
close when making my calculations. Answer: Use the lows.
>On Fri, 19 Dec 1997 13:00:10 -0500, you wrote:
>
>>Realtraders,
>>
>> Currently it is 10:25am est on 12/19/97 and the S&P 500 is down 18.74 to
>>936.56. I just thought I would show you a potential symmetrical wave setup
>>that is currently taking place. Please take a look at the attached 60
>>minute chart of the S&P Cash market which dates back to the October high.
>>
>> You will notice that once we made our October LOW on 10/28/97, the market
>>rallied to 949.62 on 11/5/97. This will be the Wave 1 high. Subsequently,
>>the market pulled back to 900.76 on 11/13/97, and is called the Wave 2
>>bottom. This decline measures 48.86 points. If we calculate the 20%
>>leeway, we get a +/- range of 9.77 points or a zone of 39.09 to 58.63.
>>
>> From the Wave 2 bottom, the market again rallied to 986.14 on 12/5/97
>>this is our Wave 3 high. Since that high, the market has pulled back to
>>our current level, which (as I write this) is now 931.58 (down 24.00 pts.)
>>and is POSSIBLY forming our Wave 4 bottom. If we measure this Wave 3 - 4
>>decline, we get a magnitude of 54.56 AND WE HAVE SYMMETRICALLY MATCHED WAVE
>>1 - 2. Therefore, believe it or not, I am looking for some sort of support
>>RIGHT NOW!!! Further, several of our 60 minute oscillators and indicators
>>of very oversold and are looking to turn up.
>>
>> Finally, this wave structure is considered intermediate term in nature
>>and could provide support which could last for several days to several
>>weeks. Note, based on the above structure, you should place your stop loss
>>just below the MAXIMUM leeway value of 58.63 points from the Wave 3 high or
>>in the area of 927. Also, I would just like to say, that I would not enter
>>a new long position at this exact moment. It would be like trying to catch
>>a falling knife. Personally, I would wait a little longer to see if we can
>>reverse this downtrend later today and also hold above our maximum leeway
>>level and if we do, I would be looking to go long at that time. Obviously
>>keeping a tight stop close at hand.
>>
>>Hope this helps,
>>John Boggio
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